International Taxation Conference Mumbai, India 2-4 December International Tax Disputes

Transcription

1 International Taxation Conference Mumbai, India 2-4 December 2010 International Tax Disputes New Zealand Experience Carmel Peters

2 Resolving International Disputes Under Domestic Law Binding Rulings Disputes Process Court Decisions

3 Binding Rulings Statutory Binding Rulings Regime Three types of rulings: Public Rulings, Product Rulings & Private Rulings Focus is interpretation of the law on assumed facts Will rule on anti avoidance Fee based on cost recovery Decision binds the Commissioner

4 Disputes Process Administered by IR post investigation but prior to any judicial process All cards on the table involving legislated steps before adjustment to taxpayer s self assessment is made Non-statutory phases conferences and adjudication If dispute unresolved it goes to court Defines court proceedings through disclosure requirements relating to legal propositions

5 Court Process Post adjudication and assessment by Commissioner Can go to either Tax Court or High Court High value disputes to High Court in practice Two levels of appeal: Court of Appeal Supreme Court

6 Resolution of Disputes under Treaties Mutual Agreement Procedure (MAP) Advance Pricing Agreements (Subset of MAP Arbitration

7 Source and Nature of MAP Disputes Most MAP cases with our biggest trading partners Australia United Kingdom United States

8 Source and Nature of MAP Disputes cont d Types of MAP cases include: Is there a Permanent Establishment? Residence Tax arbitrage transactions Bulk of NZ MAP cases are transfer pricing

9 Source and Nature of MAP Disputes cont d NZ treaties follow OECD Model in material respects: Article 5 Article 7 Article 9 Article 25 Article 26 Permanent Establishment Business Profits Associated Enterprises Mutual Agreement Procedure Exchange of Information

10 Role of Transfer Pricing Guidelines 1. Minimise number of MAP disputes 2. Common framework for resolving disputes 3. Principle based approach. No horse trading

11 Role of Competent Authorities Skilled & experienced staff on TPG and EOI Personnel solution orientated Respect spirit of treaty to relieve double taxation

12 Role of Taxpayer & Advisers Compliance with TPG Quality documentation Early cooperation all cards on table

13 Advance Pricing Agreements Advance Pricing Agreement (APAs) on the rise Common Taxpayer concerns cost timeliness results

14 Advance Pricing Agreements cont d Key advantages of APAs are: No pre established negotiating positions Advance business certainty especially for difficult issues (eg, valuing intangibles) Sustainable resolution of issues

15 Arbitration Article 25(5) of MTC Taxpayer presents case for arbitration if disputes unresolved within two years Article 25(6) & (7) Australia/New Zealand Tax Treaty Arbitration limited to issues of fact Delayed entry into force